Exporters' body FIEO Wednesday applauded the Supreme Court judgement rulling that income tax should be levied only on the difference between the selling price and face value of Duty Entitlement Passbook (DEPB) scrips.

The apex court's judgement comes as a silver lining amidst grimmer realities of falling exports and stagnant manufacturing, said FIEO president Rafeeque Ahmed.

He said the genesis of the problem is the 2nd Amendment of the Taxation Laws Act 2005 (No. 155 of 2005) which gives relief to the exporters who have used Duty Entitlement Pass Book (DEPB) provided they have an export turnover not exceeding Rs. 10 crore or have utilized DEPB for their own use.  This amendment was inserted with effect from 1st of April, 1998.

As a result, the FIEO chief added, number of exporters having exports of more than Rs. 10 crore who have sold or transferred DEPBs during AY 1988-99 to 2004-05 and  had already submitted their return were re-opened for scrutiny and  heavy tax demands /liabilities were raised on these units with retrospective effect (1998) threatening their very existence.

DEPB was an incentive scheme of that provided to exporters. The scheme was abolished with effect from October 1, 2011. Export products earlier covered under DEPB now have the benefit of the duty drawback scheme.

For assessment year 1998-99 to 2004-05, government was levying IT on exporters with turnover of Rs 10 crore or higher, on entire sale proceeds accruing from the sale or transfer of DEPB.

Source: smetimes.in